The Indian rupee opens relatively flat and faces a less challenging backdrop on Wednesday, after a fall in US rate-hike expectations and slightly softer oil tempered pressure on a currency that has needed regular central bank support. On Tuesday, It fell to a two-month low of 96.1475 before recovering amid likely Reserve Bank of India intervention. The RBI has been managing the rupee, using its increased FX reserves firepower to prevent external pressures from translating into excess pressure on the currency. A dovish repricing in expectations for another Federal Reserve rate hike next month relieves pressure on the RBI to an extent. The odds have fallen to 44% from nearly 70% amid softer US activity data. The dollar stood near this year's high versus the euro on Wednesday and was poised for the largest monthly rise against it in 14 months, powered by US growth and rising US interest rates in contrast to the energy and debt worries. On Tuesday the euro dipped to its lowest since May 2025, at $1.1312, and it traded nearby at $1.1339 in Asia on Wednesday. The euro is also testing support around 178 yen. The dollar is up nearly 2.5% on the euro in September and it is set to notch a third straight quarterly rise.The stronger greenback has also pushed the Australian dollar below 70 cents for the first time since early August, with the Aussie slipping to a nine-week low of $0.6959. The dollar also hit a 16-1/2-month top on the Swiss franc on Tuesday at 0.8358 francs. The franc has suffered, in part, because investors have gone looking for low-yielding alternatives to yen to sell in search of carry elsewhere. The yen has fallen out of favour as a short against the dollar following US-Japan yen buying in July and August, which has been followed by warnings not to test their resolve, as well as a pickup in the pace of Japanese rate hikes. The dollar has dropped 2% on the yen in September and almost 3.8% over the third quarter, touching a low of almost two weeks at 156.38 in Asia trade. Sterling touched a three-month trough on Tuesday and last sat nearby at $1.3230. il prices rose on Wednesday after US President Donald Trump denied he would be willing to ease sanctions on Iran while Qatar pushed for peace talks, after falling in the previous session on a recovery in crude supply from the Middle East. Brent crude futures rose $1.14, or 1.11%, to $103.73 a barrel by 0131 GMT. US West Texas Intermediate crude gained 34 cents, or 0.38%, to $89.72. Brent is headed for a monthly gain of around 14%, its biggest climb since July, while WTI is on track for a 4% rise after having breached $106 for the first time since May. As a result for Indian markets, oil prices dropped about 2.5% on Tuesday amid signs that Middle East exports were recovering.
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The fortunes of the euro, trading not far off its lowest levels of the year against the dollar, are in the grip of a global energy shock and growing political risk in Europe. The euro was heading towards $1.20 in August, but has fallen around 2% this month to two-month lows of just below $1.14 . While a US rate rise that has restored the Fed's inflation-fighting credentials has bolstered the dollar, the euro's outlook has also been muddied by politics and a renewed rise in oil prices that could hurt an economy that has held up better than expected. Australia's central bank raised its cash rate to a 15-year high of 4.60% on Tuesday in its fourth hike of the year, saying inflation was too high and it was prepared to hike further if needed. Wrapping up its September policy meeting, the Reserve Bank of Australia board voted unanimously to lift rates by 25 basis points, bringing the tightening this year to a full percentage point. The board said some of the upside risks to inflation were materialising with energy costs high and productivity weak at home. Oil prices and bond yields rose in an uncomfortable combination for stocks on Tuesday, as investors braced for an era where short-term borrowing costs settle at their highest levels in years. Australia raised its cash rate to a 15-year high, as expected, and market participants have bet on it going higher still. The benchmark 10-year US Treasury yield spiked to a 19-year high above 5.27% on Monday for a rise of nearly 50 basis points through September. Yields rise when bond prices fall and the monthly selloff is the heaviest for two years. Sovereign yields are an anchor for global markets, a reference price for investing in riskier stocks and a benchmark for mortgages and corporate borrowing. Higher rates mean pressure on government, corporate and household budgets.......